By Matthew Templeton
Managing Principal
KW Urban Dallas

Why is there so much movement in the iBuyer world?

First: What is an iBuyer?

An iBuyer is an institutional or business-based investor that uses automated valuation models (using data and algorithms to estimate value and trends over time) to make offers on properties in the market without actually having to have a huge workforce on the ground.

Who are these guys? Opendoor may be the one you’ve heard about the most. But also, Knock (a version of iBuying that gives you cash to buy the home you want before helping you sell yours), Offerpad, Coldwell Banker, Zillow Instant Offers (opened in Dallas on April 15), and coming in May to Texas, Keller Williams, according to Inman News this week.

How is this different than a traditional investor? In some ways, it’s not — individuals with bandit signs that say things like “we buy houses for cash” and companies like HomeVestors (“We Buy Ugly Houses”) with billboards have been models for decades.  

What’s different is that these institutional investors can buy properties at scale and their hope is to make money on the volume acquisition.  They claim to be purchasing at higher prices than a traditional investor (seemingly providing convenience for a slightly lesser price than retail).  The marketing pitch is slick. The idea behind it seems amazing — except that homes are not just data points. The fallout is yet to be determined.

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